Financial Assessments and Investigation of Indicators of Financial Well-Being in an Emerging Market

Abstract

This study investigates the financial self-assessments and households’ well-being using a national survey of 2,567 households in Turkey. We use Maslow’s hierarchy of needs framework through households’ views for their ability to meet current living expenses in the short-term as well as their saving decisions for their retirements in the long-term. Findings show that households’ daily concerns including inability to meet short-term expenses including healthcare, daily living expenses (food and utilities), and inability to maintain the existing life standard are highly significant factors in explaining their financial well-being. Moving to the next stage in Maslow’s hierarchy of needs, we find that having enough income during the retirement and ability to find a job in the future when needed are positively related to financial well-being. When households’ income is from work, rental properties, family, and retirement, they feel financially more secure. We find that households with high inheritance income expectations or income from private pension at the retirement tend to save less. Finally, when the number of people in the family providing family income is more than two persons, they tend to save less.

Keywords: financial well-being and assessment, saving behavior, retirement, emerging market, Turkey

JEL Classification: D10, D14, D19